Opinion
A148798
12-22-2017
RALPH OLIVERIO, Plaintiff and Appellant, v. TRANSDEV SERVICES, INC. et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (City & County of San Francisco Super. Ct. No. CGC-15-549509)
In this action for breach of contract and violation of the Unfair Competition Law (Bus. & Prof. Code, §§ 17200, 17500) (UCL), the trial court sustained the demurrer of defendant Transdev Services, Inc. (Transdev). Plaintiff Ralph Oliverio contends this was error because he pleaded sufficient facts, for purposes of his breach of contract cause of action, to show he was a member of a class of intended third party beneficiaries and, for purposes of his UCL claim (Bus. & Prof. Code § 17200 et seq.), that Transdev's conduct caused him to lose "money or property." We affirm the court's ruling on the contractual claim and reverse as to the UCL claim.
I. FACTUAL AND PROCEDURAL BACKGROUND
Oliverio's claims arise from Transdev's alleged failure to meet certain of its obligations as paratransit broker for San Francisco's paratransit program (Paratransit Program or Program), which provides transportation services for persons with disabilities in the City and County of San Francisco (the City). Transdev, a corporation specializing in transportation, entered into an agreement with the City (the Paratransit Agreement or Agreement) under which it agreed to administer all aspects of the Program. The Agreement contemplates the execution of subcontracts between Transdev and transportation service providers (TSPs or Providers), including San Francisco based taxicab companies, to provide transportation to Program clients. Codefendant Yellow Cab Cooperative, Inc. (Yellow Cab) is one such subcontractor.
"Transportation Service Providers" or "Providers" are defined in the Paratransit Agreement as "[s]ubcontractors to the Paratransit Broker that provide van and taxi transportation services for the Paratransit Program." (Paratransit Agreement, p.4, Definitions.)
Oliverio alleges that Transdev breached its obligations under the Paratransit Agreement and under local law governing the Paratransit Program. The latter consists of local ordinances requiring all taxicab companies operating in San Francisco to participate in the Paratransit Program and for their taxicabs to comply with Program rules. (S.F. Transportation Code, §§ 1105, subd. (a)(11), 1106, subd. (j).) Such rules include "San Francisco Municipal Transportation Agency's Taxi Division: Minimum Requirements for Taxicab Company Participation in the SF Paratransit Program" (the SFMTA Regulations). Oliverio alleges that the SFMTA Regulations establish the minimum insurance requirements at issue in this case. A. Transdev's Alleged Enforcement Obligations
Oliverio alleges Transdev breached its contractual obligation to actively oversee and monitor the performance of its TSPs. The Agreement's "Scope of Work" addendum requires Transdev to "[m]onitor and enforce procedures to ensure Providers' contract compliance." (Paratransit Agreement, appen. A, § VIII.) This includes the duty to "systematic[ally] monitor" Providers to ensure that they "[d]emonstrate required insurance coverage and maintain Certification of Insurance, annually and upon renewal . . . ." (Ibid.) Similarly, section 15.10 of the Agreement requires Transdev to monitor and enforce insurance obligations as to all "subcontractors." "If a subcontractor will be used to complete any portion of this agreement, the Contractor shall ensure that the subcontractor shall provide all necessary insurance and shall name the City and County of San Francisco, its officers, agents and employees and the Contractor listed as additional insureds." (Id. § 15.10, italics added.)
The term "subcontractor" is not defined, except that it includes TSPs. (Paratransit Agreement, p.4, Definitions.) Transdev entered into subcontracts for various administrative support services, as well as for transportation.
The Agreement does not define the phrases "required insurance coverage" or "all necessary insurance." Nor does it specify the types or amounts of insurance that TSPs must carry. The only substantive insurance requirements in the Agreement concern Transdev, not Providers. (Paratransit Agreement, § 15.1 et seq.) Oliverio alleges that "required insurance coverage" and "all necessary insurance" include insurance required by the SFMTA Regulations, which are generally incorporated by section 54 of the Paratransit Agreement. These regulations obligate the paratransit broker (Transdev) to enforce minimum automobile liability insurance requirements on Providers by, inter alia, withholding contract payments from noncompliant TSPs. B. The Program's Minimum Automobile Liability Insurance Requirements for TSPs
Sections 15.1 et seq. of the Agreement enumerate several types of insurance Transdev must carry during the term of the Paratransit Agreement, including $2 million in commercial automobile liability insurance, and require that Transdev's policies name the City and its officers, agents, and employees as additional insureds. Transdev's policies must be primary to other insurance available to additional insureds "with respect to any claims arising out of [the] Agreement." (Paratransit Agreement, § 15.2.2.) The final clause in section 15 of the Agreement concerns subcontractor insurance; it requires Transdev to ensure that its subcontractors carry "all necessary insurance," but does not mention the applicable term, impose any primary insurance requirement, or limit its applicability to claims arising out of the Agreement. (Id. § 15.10.)
Section 54 of the Agreement requires that Transdev "keep itself fully informed of the City's Charter, codes, ordinances and regulations of the City and of all state, and federal laws in any manner affecting the performance of this Agreement" and "at all times comply with such local codes, ordinances, and regulations and all applicable laws as they may be amended from time to time." (Paratransit Agreement, § 54.)
They state: "If, at any time during the term of this Agreement, the dispatch service, specific cab or color scheme fails to maintain the required insurance in full force and effect, all paratransit work shall be discontinued immediately, and all contract payments due or that become due shall be withheld until notice is received by City and Paratransit Broker that the required insurance has been restored to full force and effect and that the premiums therefore have been paid for a period satisfactory to Paratransit Broker. Failure to maintain the required insurance shall be sufficient cause for termination of any service Agreement between color scheme and dispatch service with the Broker." (SFMTA Regulations, § VII.D.6., italics added.)
Specifically, the SFMTA Regulations require taxicab companies to maintain at least $1 million of automobile liability insurance "per accident combined single limit for bodily injury liability and property damage liability including liability to passengers." (SFMTA Regulations, § VII.C.) Such insurance must be maintained "on all vehicles . . . used to provide paratransit taxi services under any agreement with the Broker" and coverage is required for "[a]ll vehicles and all drivers at all times when in service . . . regardless of schedules of insured vehicles and drivers." (Id. §§ VII.C, VII.D.8.)
Oliverio contends that this sweeping language, combined with City ordinances requiring every taxicab company to (1) participate in the Paratransit Program and (2) obtain contractual assurances from their drivers to abide by the requirements of the Paratransit Program, demonstrate the City's intent to require that every taxicab and driver operating within the City carry the $1 million minimum automobile liability coverage, around the clock, regardless of whether the vehicle is, at any given time, providing services under the Paratransit Agreement.
As evidence that Transdev understood this to be the City's intent, Oliverio relies upon subcontracts entered into between Transdev and Yellow Cab. Consistent with the regulation, these subcontracts require Yellow Cab to maintain at least $1 million automobile liability coverage for "all vehicles used to provide services under this Agreement . . . ." They require such policies to "provide coverage for 'all vehicles' or 'all hired, owned and non-owned vehicles." This, Oliverio contends, shows Transdev's knowledge, both of its enforcement obligation and that the minimum coverage applied to every vehicle in a TSP's fleet. C. Oliverio's Injury and the Ensuing Litigation
In 2013, while crossing the street, Oliverio was struck and seriously injured by a Yellow Cab taxicab. He sued Yellow Cab and won a judgment of $861,250. Yellow Cab did not carry the mandated minimum insurance, however, and did not pay Oliverio's judgment. Instead, it invited Oliverio's attorney to confer with Yellow Cab's bankruptcy attorney. It later filed for bankruptcy and Oliverio's judgment remains unsatisfied.
Oliverio seeks judicial notice of documents which he says evidence the bankruptcy and Yellow Cab's failure to pay similar personal injury claims. We exercise our discretion to grant the request in part. While the existence of the document, and the bankruptcy claims set forth therein are plainly subject to judicial notice (Evid. Code, § 452, subd. (d)), we decline to take judicial notice of Oliverio's suggestion that the claims against Yellow Cab are meritorious and unsatisfied. These are factual allegations reasonably subject to dispute and not court findings resulting from an adversary proceeding. (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882-883 [refusing to take judicial notice of the truth of matters which were reasonably subject to dispute]; Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, 1607, fn. 1 [declining to take judicial notice of factual findings on order on uncontested motion].)
Oliverio then filed this action, alleging that Transdev's failure to monitor and enforce Yellow Cab's compliance with the $1 million insurance minimum, which constitutes a breach of the Paratransit Agreement, is the proximate cause of Yellow Cab's inability to satisfy his personal injury judgment, and that he was an intended third party beneficiary of that Agreement. He also alleges that Transdev's failure to enforce the insurance minimum violated the SFMTA Regulations, in violation of Business and Professions Code section 17200 et seq.
Oliverio also included a cause of action under the False Advertising Law (Bus. & Prof. Code, § 17500) (FAL). As he did not appeal the trial court's dismissal of this claim on demurrer, he has abandoned the FAL claim against Transdev.
Transdev demurred, arguing that the complaint does not state facts to establish Oliverio's status as an intended third party beneficiary. Transdev also demurred to Oliverio's claim under the UCL on the grounds that Oliverio fails to allege (1) Transdev's conduct inflicted any actual or imminent economic harm or (2) his "actual reliance" on any statement by Transdev, which must be pleaded with particularity.
The trial court sustained the demurrer, denying leave to amend as to the cause of action for breach of contract and allowing it as to the UCL cause of action. Oliverio did not amend his complaint and judgment was entered dismissing his claims. This appeal followed.
II. DISCUSSION
We review the court's decision to sustain a demurrer de novo, to determine as a matter of law whether the complaint states a cause of action. (Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501; Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125.) We must accept as true all material facts alleged in the complaint and construe the complaint liberally with a view to attaining substantial justice between the parties. (Rufini v. CitiMortgage, Inc. (2014) 227 Cal.App.4th 299, 304, citing Code Civ. Proc., § 452.) We may also consider matters subject to judicial notice. (Martinez v. Socoma Companies, Inc. (1974) 11 Cal.3d 394, 400 (Martinez).) We review the judgment, not the court's rationale. (Harris v. Grimes (2002) 104 Cal.App.4th 180, 185.) A. Oliverio Does Not Plead Standing to Sue on Transdev's Contractual Obligations
Transdev objects that Oliverio's opening brief fails to explain why the order appealed from is appealable, as required by California Rules of Court, rule 8.204(a)(2)(B). The judgment challenged is clearly appealable. (Code Civ. Proc., § 904.1, subd. (a)(1).) As such, we decline to dismiss the appeal and instead exercise our discretion to disregard Oliverio's technical noncompliance with the rule. (Cal. Rules of Court, rule 8.204(e)(2)(C); Westchester Secondary Charter School v. Los Angeles Unified School Dist. (2015) 237 Cal.App.4th 1226, 1235, fn. 4.)
In deciding whether Oliverio has pleaded facts to support his alleged status as an intended third party beneficiary of certain provisions of the Paratransit Agreement, we must accept Oliverio's alleged construction of the Paratransit Agreement so long as it does not conflict with the attached written agreement and it is not "clearly erroneous." (Martinez, supra, 11 Cal.3d at p. 400; Pigeon Point Ranch, Inc. v. Perot (1963) 59 Cal.2d 227, 233, overruled on other grounds by Kowis v. Howard (1992) 3 Cal.4th 888, 899-901.) Thus, at this stage, we are "limited to evaluating whether the Agreement[] . . . [is] susceptible to plaintiff's interpretation, based on the pleaded facts and the documents attached to the operative complaint." (The H.N. & Frances C. Berger Foundation v. Perez (2013) 218 Cal.App.4th 37, 45.) We find that it is not.
1. Governing Law—Third Party Beneficiary Status
The test for determining whether a contract was made for the benefit of a third party is well established. We ask "whether an intent to benefit a third person appears from the terms of the contract. [Citation.] If the terms of the contract necessarily require the promisor to confer a benefit on a third person, then the contract, and hence the parties thereto, contemplate a benefit to the third person. The parties are presumed to intend the consequences of a performance of the contract." (Johnson v. Holmes Tuttle Lincoln-Mercury Inc. (1958) 160 Cal.App.2d 290, 297 (Johnson).) However, the mere fact that an agreement results in a benefit to a third party does not, itself, confer standing; the parties must have intended the benefit. (Neverkovec v. Fredericks (1999) 74 Cal.App.4th 337, 348 (Neverkovec); but see Rodriguez v. Oto (2013) 212 Cal.App.4th 1020, 1029-1030 .) Third parties who are benefited only incidentally or remotely are not intended beneficiaries. (Martinez, supra, 11 Cal.3d at p. 400; Lucas v. Hamm (1961) 56 Cal.2d 583, 590 (Lucas).) Under California law, to be an intended beneficiary, one must be either a creditor beneficiary or donee beneficiary. (Martinez, at p. 400.)
These classes of intended third party beneficiaries and their criteria are further discussed, post.
"While intent is pivotal, there is no requirement that 'both of the contracting parties must intend to benefit the third party . . . .' " (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1023 (Spinks).) "[I]t is sufficient that the promisor must have understood that the promisee had such intent. [Citations.] No specific manifestation by the promisor of an intent to benefit the third person is required." (Lucas, supra, 56 Cal.2d at p. 591.) Absent a clear expression of intent, we inquire whether " 'the circumstances indicate that the promisee' . . . 'intends to give the beneficiary the benefit of the promised performance.' " (Spinks, at p. 1023.)
" 'Ascertaining this intent is a question of ordinary contract interpretation.' " (Spinks, supra, 171 Cal.App.4th at p. 1023, quoting Hess v. Ford Motor Co. (2002) 27 Cal.4th 516, 524.) Thus, the intent to benefit a third party may be gleaned not only from the contract's literal terms, but considering "the circumstances under which [those terms were] entered" (Jones v. Aetna Cas. & Sur. Co. (1994) 26 Cal.App.4th 1717, 1725 (Jones)); the object, nature, and subject matter of the contract (Morey v. Vannucci (1988) 64 Cal.App.4th 904, 912); evidence of the parties' negotiations (Neverkovec, supra, 74 Cal.App.4th at p. 351); and the parties' subsequent, predispute conduct, to the extent it demonstrates their " 'practical construction' " of the contract (Spinks, at p. 1024). The answer does not depend upon any one party's subjective views, but upon what the parties' objective manifestations of its intent would lead a reasonable person to believe. (Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 632.)
Finally, although an intended third party beneficiary need not be identified or named in the contract, he or she must be a member of a class of persons for whose benefit it was made. (Garratt v. Baker (1936) 5 Cal.2d 745, 748.)
2. Various Provisions Limit Transdev's Obligations to the Paratransit Program Services
We start with the language of the Paratransit Agreement. Oliverio argues the Agreement (with incorporated regulations) manifests the City's intent to ensure that TSPs carried at least $1 million in automobile liability insurance, for all vehicles, at all times, and thus intended to benefit the general public with the availability of such proceeds. However, he has identified no contractual language that could fairly be construed—in light of the surrounding circumstances and the purpose of the Agreement—to create the right in members of the public to sue Transdev for damages for its nonperformance; nor has he identified language suggesting the City intended to provide compensation to members of the public for injuries unrelated to the Paratransit Program.
The purpose of the Paratransit Agreement is to provide transportation services for the elderly and persons with disabilities. Consistent with that objective, various provisions of the Agreement expressly limit the scope of the parties' obligations to the Paratransit Program. (See, e.g., Paratransit Agreement, p. 4, Definitions [defining Providers as subcontractors "that provide van and taxi transportation services for the Paratransit Program" (italics added)]; id. at § 15.2.2 [requiring Transdev to carry commercial general liability and commercial automobile liability policies which "are primary insurance . . . with respect to any claims arising out of this Agreement" (italics added)]; id. at appen. A, § V [accident reporting requirement limited to accidents observed while performing under the contract]; id. at appen. F [safety and customer service "incentive plan" rewarding contractors based upon number of accidents occurring during the provision of Paratransit Program services].)
While Oliverio is correct that the Agreement incorporates applicable law, including the SFMTA Regulations, we disagree that the language of those regulations shows the City's intent to mandate insurance coverage for injuries not connected in any way with the provision of paratransit services. The relevant provision of the SFMTA Regulations requires the $1 million automobile liability insurance for "all vehicles . . . used to provide paratransit taxi services . . . ." (SFMTA Regulations, § VII.C, italics added.) Oliverio argues that a subsequent provision, closely following, applies the insurance mandate more broadly, to "[a]ll vehicles and all drivers at all times when in service . . . regardless of schedules of insured vehicles and drivers." (Id. at § VII.D.8.) These two provisions must be read in harmony with one another, however; otherwise, the first provision, containing express limitations, will be given no effect. (See, e.g., Stockton Savings & Loan Society v. Purvis (1896) 112 Cal. 236, 238 [the parties' intentions must be gleaned "from the contract taken as a whole, considering all its provisions together, and not from any one clause considered as standing alone"]; Jones, supra, 26 Cal.App.4th at p. 1725 [same].) Reading the latter provision in the context of the former one, "in service" reasonably refers to times when the subcontractor is providing services to the Paratransit Program, and "regardless of schedules" is reasonably construed to ensure that minimum insurance coverage is in place whenever a vehicle is actually rendering service to the Program, regardless of whether it was scheduled to do so. Moreover, Oliverio's construction would impermissibly render the phrase "used to provide paratransit taxi services" as surplusage. (Rebolledo v. Tilly's, Inc. (2014) 228 Cal.App.4th 900, 923.)
Nowhere does the Agreement suggest that Transdev may be liable to individual members of the public for alleged noncompliance with its provisions, including for a failure to monitor subcontractors' insurance obligations. In reply, Oliverio cites section 14.1 of the Agreement, in which Transdev agrees to be liable "for the acts and omissions of itself, its employees and its agents." However, this provision (unlike others in the Agreement that specifically mention subcontractors) makes no mention of liability for the conduct of subcontractors. Nor does it refer to Transdev's liability to members of the general public (as opposed to its contractual partner, the City). Likewise, section 18 of the Agreement makes Transdev responsible for incidental and consequential damages resulting in whole or in part from Transdev's actions, but does not mention damages caused by a subcontractor, or potential liability to anyone other than Transdev's contractual partner.
3. Johnson and James Stewart Are Inapposite
Oliverio relies principally upon Johnson, supra, 160 Cal.App.2d 290. There, an automobile salesman promised the purchaser of a car that the dealer would procure and include in the purchase price "full coverage" automobile liability insurance, which would cover "public liability and property damage." (Id. at pp. 293-294.) Instead, and unbeknownst to the purchaser, the dealer obtained a policy which merely ensured that, in the event that the purchaser suffered death or disability, the insurer would pay off any balance owing on the vehicle. (Ibid.) Later, the purchaser injured the plaintiffs in an automobile accident. (Ibid.) Judgment was entered for the plaintiffs against the purchaser. (Ibid.) The plaintiffs then sued the dealership for breach of contract on a third party beneficiary theory, which the dealership disputed. (Id. at pp. 295-296.)
The Court of Appeal held that the plaintiffs were intended third party beneficiaries of the contract between the dealer and the purchaser. The Court observed that, when a party agrees to procure automobile liability insurance policy for another, he intends the consequences of the performance of that agreement, which include the protection of third parties from losses that would have been covered by the promised policy. (Johnson, supra, 160 Cal.App.2d at p. 297.) In the court's view, the promisee-purchaser "obvious[ly]" intended not only to shield himself against potential liability, but to benefit "anyone to whom [the purchaser] might become liable as a result of a hazard incident to ownership and operation of [the purchased vehicle]." (Id. at p. 300.) Further, the promise to provide automobile liability insurance triggered the application of Insurance Code section 11580, which creates the right of injured persons to sue an insurer directly for the loss or damage caused by the insured tortfeasor, making the plaintiffs contingent creditor beneficiaries. (Id. at p. 298.)
Insurance Code section 11580 inserts, by operation of law, the right to sue the insurer directly into any policy insuring "[a]gainst loss or damage resulting from liability for injury suffered by another person," excepting certain policies not applicable in Johnson or here. (Ins. Code, § 11580.)
In reaching this conclusion, the Court of Appeal relied heavily upon James Stewart & Co. v. Law (1950) 149 Tex. 392 (James Stewart), a Texas Supreme Court case. In James Stewart, a corporation—the property owner—entered into a construction contract with a general contractor who promised to maintain certain insurance and to require that its subcontractors carry automobile liability insurance. (Id. at pp. 394, 396-398.) In the course of performing, an uninsured subcontractor injured an on duty employee of the owner. (Id. at p. 394.) The Texas Supreme Court held that the injured employee was an intended third party beneficiary of the general contractor's promise to enforce minimum insurance requirements on the subcontractor. (Id. at pp. 398-399.) As noted in Johnson, the Texas Supreme Court reasoned that the parties intended to provide for such insurance and thus must have intended the consequences (that valid liability claims would be paid by the insurer). (Johnson, supra, 160 Cal.App.2d at p. 299, fn. 2.)
Although it was not discussed in James Stewart, we note that the insurance requirement, had it been properly performed, would have protected the owner from liability for the injuries of its employee, making the employee a creditor beneficiary. By contrast, had the subcontractor injured a person working on an entirely different project, having no connection to the owner, the promised insurance coverage would have conferred a benefit on a person with no claims against the owner, making the beneficiary incidental, not intended, under California law.
Certainly, our courts have found that some promises, by their very nature, evince an intent to benefit certain nonparties. Where an attorney negligently prepared a will, the persons whom the testator sought to benefit were intended third party beneficiaries because the will's purpose was to transfer the estate of the testator to those persons. (Lucas, supra, 56 Cal.2d at pp. 589-590.) Similarly, provisions requiring a government contractor to pay employees a prevailing wage were held to demonstrate that the government intended to confer a benefit on those workers, making them intended beneficiaries of that contract provision. (Department of Industrial Relations v. Fidelity Roof Co. (1997) 60 Cal.App.4th 411, 426 (Fidelity Roof).)
Oliverio, however, pleads no facts to show that the City owed him, or a group of which he was a member, some legal duty which the insurance requirement was intended to discharge. Nor are there any allegations or judicially noticed facts to suggest the City could potentially be liable under the Paratransit Agreement for injuries having no connection to the Paratransit Program.
Oliverio does not plead that he was injured by a taxicab on a paratransit run. Nor has he disputed Transdev's contention that, at the time of the accident, the Yellow Cab that injured him was not performing under Yellow Cab's subcontract with Transdev.
4. Oliverio Is Not in a Class of Intended Beneficiaries
"A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it." (Civ. Code, § 1559.) However, only an expressly intended beneficiary of a contract can enforce it; an incidental beneficiary lacks any standing to do so. (Martinez, supra, 11 Cal.3d at p. 400.) And when dealing specifically with a government contract, a contractor who agrees to render services to members of the public is under no duty to compensate a member of the public who is injured while the contractor is providing services unless " 'an intention is manifested in the contract, as interpreted in the light of circumstances surrounding its formation, that the promisor shall compensate members of the public for such injurious consequences . . . .' " (Martinez, at pp. 401-402, quoting Rest., Contracts, § 145, original italics.)
In the present case, the only expressly intended beneficiary of the insurance provisions in the Agreement was the San Francisco Municipal Transportation Agency (SFMTA), which was indemnified for injuries caused by a Provider, i.e., a taxi engaged in providing paratransit services.
Zigas v. Superior Court (1981) 120 Cal.App.3d 827, cited by Oliverio, is not on point. The government contract in Zigas obligated landlords to file rent schedules and charge the plaintiffs (and other tenants) rent in accordance with those schedules. (Id. at p. 831.) The plaintiffs sued the government contractors for noncompliance, which allegedly deprived them of the benefit of paying rent at the scheduled rate. (Ibid.) Zigas differs from this case in a critical respect: The Zigas plaintiffs sued for a breach of a contract term that was created solely for their benefit, and not for the benefit of the government or the general public. (Ibid.) By contrast, Oliverio sues for the alleged deprivation of a benefit designed to address losses occasioned by the Paratransit Program—which would not include Oliverio's injury. In other words, the Paratransit Agreement was intended to benefit a distinct class of persons that does not include Oliverio.
Oliverio's other authorities are similarly inapposite. Most involved prevailing wage provisions enacted for the express purpose of ensuring minimum wages for an identified class of laborers; further, these cases did not address or apply the legal standard set forth in Martinez, supra, 11 Cal.3d 394. (See, e.g., Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1193-1194; Tippett v. Terich (1995) 37 Cal.App.4th 1517, 1531-1532, abrogated on other grounds by Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 171; Fidelity Roof, supra, 60 Cal.App.4th at pp. 425-426.) Service Employees Internat. Union, Local 99 v. Options—A Child Care & Human Services Agency (2011) 200 Cal.App.4th 869 is likewise unavailing, as the plaintiffs in that case, while clearly intended beneficiaries of the contractual requirement to abide by open meeting laws, did not sue for damages, and the court expressly distinguished Martinez on that basis. (Id. at p. 881.)
5. The Extrinsic Evidence Proffered by Oliverio Is Irrelevant
Oliverio also argues that certain evidence outside of the Paratransit Agreement shows the City's manifest intent to require Transdev to ensure that all taxicabs, not just those actively engaged in Paratransit Program services, carry the minimum insurance proscribed in the SFMTA Regulations. This evidence includes (1) Transdev's subsequent conduct in entering into subcontracts with Yellow Cab and (2) the City's subsequent statements regarding its actual intentions.
Transdev's subcontracts with Yellow Cab do not support Oliverio's position. While the subcontracts required Yellow Cab to obtain automobile liability insurance policies stating coverage for "all vehicles" or "all hired, owned and non-owned vehicles," they also applied the minimum coverage to "all vehicles used to provide services under this Agreement." (Italics added.) The insurance mandate was understood to apply to vehicles providing services to the Paratransit Program.
Second, Oliverio relies upon official statements by the City which, he argues, show the City's unambiguous intent to mandate insurance coverage to benefit victims of nonparatransit related accidents. While these pronouncements may have occurred before the present controversy materialized, the statements were wholly unrelated to the City's attempts to comply with the Agreement. (Barnhart Aircraft, Inc. v. Preston (1931) 212 Cal. 19, 24.) Thus, they are not relevant to show the City's construction of the Agreement.
For example, in a California Public Utilities Commission (PUC) rulemaking proceeding, the SFMTA urged the PUC to require adequate oversight of ride sharing operations, such as Uber and Lyft. (Edward D. Reiskin, Director of Transportation, Initial Comments to Order Instituting Rulemaking Filed on Behalf of the SFMTA (Jan. 28, 2013) pp. 1-2.) In describing the insurance requirements applicable to conventional taxicabs, the SFMTA stated that generally applicable personal liability insurance requirements in California are "insufficient to cover more than minor injuries resulting from a motor vehicle accident" and stated, without qualification, that the SFMTA "requires taxi companies to provide $ 1 million in automobile liability coverage . . . ." (Id. at p. 11.) Similarly, Oliverio cites to an assertion by the Board of Supervisor's Budget and Legislative Analyst suggesting that the City accomplished its desire to impose higher insurance minimums on taxicabs operating in the City through the Paratransit Program.
Accordingly, on this record, the only facts shedding any light on the City's intent are the provisions of the Paratransit Agreement. As we have explained, these provisions do not operate to insulate the City from prospective liability for the injuries of Oliverio and persons like him (as opposed to injuries caused in the course of performance with the Paratransit Agreement); nor do they manifest the City's intent to confer upon the general public a right to sue Transdev for injuries caused by its nonperformance. B. Oliverio Pleads Economic Injury to Support an "Unlawful" UCL Claim
1. Oliverio Has Abandoned His FAL and UCL "Fraud" and "Unfair" Claims
In dismissing Oliverio's UCL and FAL claims, the trial court ruled that Oliverio's complaint did not "adequately allege economic injury by plaintiff, a specific misrepresentation or instance of false advertising by defendant or reliance by plaintiff." On appeal, Oliverio contests only the trial court's finding that he failed to plead economic injury. By failing to address "misrepresentation" or "reliance," Oliverio has effectively abandoned the claims against Transdev which incorporate these elements, to wit, his FAL claim and his UCL "fraud" claim.
Oliverio has also waived his right to appeal his "unfair" UCL claim. We agree with Transdev that Oliverio's opening brief conceded as much. In any event, by failing to respond to Transdev's argument in his reply brief, Oliverio unambiguously waived the right to pursue his UCL "unfair" claim.
2. "Reliance" Is Not an Element of Oliverio's "Unlawful" UCL Claim
Transdev also argues that Oliverio failed to plead facts showing "reliance." As a causal element of fraud, reliance must be pleaded to support a UCL "fraud" claim, but it is only required for an "unlawful" UCL claim that is grounded in deception. (See Hale v. Sharp Healthcare (2010) 183 Cal.App.4th 1373, 1385; In re Tobacco II Cases (2009) 46 Cal.4th 298, 325-326 & fn. 17.) As Oliverio's "unlawful" UCL claim may fairly be read to depend upon violations of law, not misrepresentations, he need not plead reliance.
3. Oliverio Has Pleaded Facts Constituting an Economic Injury
Transdev's principal challenge to Oliverio's "unlawful" UCL claim is the failure to plead any "economic injury." As explained in Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310 (Kwikset), the "lost money or property" requirement merely demands that the plaintiff personally suffered some actual economic harm as a result of the defendant's alleged wrongful conduct. (Id. at p. 323.) The requisite harm can be shown in myriad of ways: "A plaintiff may (1) surrender in a transaction more, or acquire in a transaction less, than he or she otherwise would have; (2) have a present or future property interest diminished; (3) be deprived of money or property to which he or she has a cognizable claim; or (4) be required to enter into a transaction, costing money or property, that would otherwise have been unnecessary." (Ibid. [and declining to "supply an exhaustive list of the ways in which unfair competition may cause economic harm"].) The magnitude of the injury need not be great; an "identifiable trifle" or "nontrivial amount" of harm will suffice. (Id. at pp. 324-325.)
Oliverio alleges that Transdev unlawfully allowed Yellow Cab to carry inadequate liability insurance, and aided and abetted Yellow Cab's violation of law, such that when he was injured by Yellow Cab, Yellow Cab could not satisfy the judgment that followed. He contends that Transdev's actions caused the following losses of money or property: the loss of the benefit of the personal injury judgment, which constitutes property; the loss of a right to sue an insurer directly (instead of suing Yellow Cab) for his losses; and the attorney's fees he has incurred to collect on the judgment in Yellow Cab's bankruptcy proceeding.
a. The Impaired Value of the Judgment Constitutes Actual or Imminent Harm
"A judgment is property" that can, for example, be transferred by assignment (40A Cal.Jur.3d (2017) Judgments, § 340) or be attached (Code Civ. Proc., §§ 487.010, subd. (c)(6), 488.480 [allowing attachment of final judgments]); and is an asset subject to marital dissolution proceedings (In re Marriage of Gonzales (1975) 51 Cal.App.3d 340, 342).
Transdev argues that it is too early to allege that Oliverio's judgment will not be satisfied, rendering Oliverio's loss speculative, conjectural, and hypothetical. Certainly, a plaintiff whose harm is purely theoretical and seems unlikely to materialize lacks standing. (Schwartz v. Provident Life & Accident Ins. Co. (2013) 216 Cal.App.4th 607, 612.) Oliverio, however, alleges that Yellow Cab refused to satisfy the judgment and instead invited his attorney to meet with bankruptcy counsel. Further, we take judicial notice of Yellow Cab's bankruptcy proceedings. Accordingly, Crayton v. Hedgpeth (E.D. Cal. May 20, 2011, No. C 08-00621 WHA (PR)) 2011 WL 1988450, cited by Transdev, is inapposite. (Id. at p. *14 [observing that the pleadings did not "suggest[] that plaintiff has 'lost' his interest [in certain judgment debts] or was otherwise harmed"].) On the facts pleaded, we may reasonably infer that the judgment remains unpaid and may never be satisfied in full. Thus, Oliverio has alleged an "actual or imminent" loss. (Kwikset, supra, 51 Cal.4th at p. 322.)
Transdev also argues that Oliverio's interest in the judgment is speculative until Yellow Cab's appeal has been finally resolved. Transdev provides no legal authority in support of this assertion. Nor does it address Oliverio's right to collect on the judgment immediately upon entry. (Code Civ. Proc., § 683.010.)
b. Oliverio's Alleged "Loss of Use" of Money Is Tenuous and Theoretical
Oliverio also argues that, as a result of Yellow Cab's delay in satisfying the judgment, he suffers the "loss of use" of judgment monies. Our Supreme Court has admittedly construed the "economic loss" concept broadly, recognizing that even a plaintiff's loss that is merely temporary or subject to mitigation, the plaintiff retains standing under the UCL. (Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758, 769, 789 [ability to "pass on" allegedly wrongful overcharges to customers did not defeat standing under UCL]; Kwikset, supra, 51 Cal.4th at p. 325 [holding a plaintiff can sue for injunctive relief under the UCL for the allegedly wrongful repossession of her vehicle, a "loss of property," and noting that economic losses occasioned thereby were a second basis for standing].) However, for the loss of use alleged here, the law provides a remedy—the payment of interest. (See Surety Sav. & Loan Assn. v. National Automobile & Cas. Ins. Co. (1970) 8 Cal.App.3d 752, 759.) Oliverio's judgment against Yellow Cab provides for post judgment interest. Oliverio does not address prejudgment interest, which is discretionary with the court. (Civ. Code, § 3288.) Even assuming arguendo that lost interest, alone, is a cognizable harm under the UCL, the loss of a discretionary remedy that may not even have been requested would seem too tenuous and theoretical to constitute an "actual" or "imminent" loss.
c. Oliverio's Inability to Sue an Insurer Is Not the "Loss" of a Vested Right
Oliverio also contends that Transdev's conduct deprived him of an important right, the right to sue an insurer directly to recover his judgment. (Ins. Code, § 11580, subd. (b)(2).) Oliverio is correct that Insurance Code section 11580 requires the courts to find, in every automobile liability insurance policy, the right to sue the insurer directly. However, under the facts pleaded here, no such policy exists. Oliverio does not allege that Transdev caused him to lose a specific, valuable right, which he already possessed, but rather that Transdev prevented him from ever acquiring such a right.
This is distinct from the operation of Insurance Code section 11580 in the context of Johnson, supra, 160 Cal.App.2d at p. 298 and the third party beneficiary question. There the court concluded that a promise to provide automobile liability insurance, by operation of Insurance Code section 11580, necessarily included the intent to address future liabilities to injured persons, thus creating a class of contingent creditor beneficiaries. (Johnson, at p. 298.)
Oliverio cites no authority for the proposition that a plaintiff may sue under the UCL for the loss of a right he never possessed. Rufini v. CitiMortgage, Inc., supra, 227 Cal.App.4th 299 is inapposite, as it involved an actual, concrete loss that had already materialized. (Id. at p. 311 [lost opportunity to pursue various means of avoiding a foreclosure on the plaintiff's home, which "[led] to the loss of his home and the equity he had in it," conferred standing to sue under UCL].) Oliverio's remaining authorities involve conduct which caused immediate and tangible economic harms to the plaintiffs, such as damage to their credit rating, the loss of credit, and increased finance charges on existing debt. (See, e.g., Alborzian v. JPMorgan Chase Bank, N.A. (2015) 235 Cal.App.4th 29, 38-39 [allegation that false report of unpaid debt to credit agencies damaged the plaintiffs' credit ratings satisfied "economic harm" requirement]; Rubio v. Capital One Bank (9th Cir. 2010) 613 F.3d 1195, 1204 [allegation that the defendant's wrongful conduct forced the plaintiff to either close her credit account with the defendant and lose the credit the defendant had previously extended, or to keep her account and accept an increased annual percentage rate on her debt].) Thus, they do not allow us to find standing in a plaintiff who merely alleges he was prevented from acquiring a right.
d. Fees Incurred in Yellow Cab's Bankruptcy Are a Cognizable Harm
Oliverio also asserts that he has incurred attorney's fees in Yellow Cab's bankruptcy proceedings, which he would not have incurred but for Transdev's unlawful conduct. Being forced to "enter into a transaction, costing money or property, that would otherwise have been unnecessary" but for defendant's wrongful conduct suffices to confer standing to sue under the UCL. (Kwikset, supra, 51 Cal.4th at p. 323.) Qualifying unnecessary transactional costs include "funds expended independently of [this] litigation to investigate or combat the defendant's misconduct" so long as the efforts are to counteract the wrongful conduct and not merely in anticipation of litigation. (Animal Legal Defense Fund v. LT Napa Partners LLC (2015) 234 Cal.App.4th 1270, 1279-1284 (ALDF); cf. Westfall v. Mortgage Electronic Registration Systems, Inc. (S.D. Cal. Mar. 30, 2016, No. 3:15-cv-01403-L-NLS) 2016 WL 1241520, at p. *6, fn. 2 [costs of investigating wrongful mortgage servicing practices were in anticipation of litigation, did not confer standing].)
Although Oliverio does not plead the expenditure of such funds, it would appear that such expenditures occurred after the filing of the complaint; thus, to the extent that such specificity in pleading is necessary, Oliverio should be granted leave to amend to add the relevant allegations.
Oliverio's efforts in Yellow Cab's bankruptcy are independent of this action; they are neither "in anticipation of" or "prefatory" to the instant litigation. Further, he contends that such efforts would not be needed "but for" Transdev's alleged failure to abide by its regulatory enforcement obligations. Thus, the attorney's fees Oliverio allegedly incurred in Yellow Cab's bankruptcy proceeding constitute an independent "loss of money" caused by Transdev for purposes of standing. (ALDF, supra, 234 Cal.App.4th at pp. 1279-1284.)
Transdev does not argue that Oliverio failed to plead facts (other than economic injury) sufficient to establish liability under the UCL, so we do not express any opinion on this issue.
III. DISPOSITION
We affirm the trial court's judgment as to the breach of contract claim, reverse as to the UCL claim, and remand for further proceedings. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)
/s/_________
KENNEDY, J. We concur: /s/_________
RUVOLO, P. J. /s/_________
RIVERA, J.
Judge of the Superior Court of California, County of Contra Costa, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.